Gold & Silver Daily

Ed's Critical Reads

Nov 22, 2014

Sell, Sell, Sell---The Central Bank Madmen Are Raging

The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.

Yet overnight two central banks promised what amounts to more monetary heroin and, presto, the S&P 500 index jerked up to 2070. That is, the robo-traders inflated the PE multiple for S&P’s basket of US-based global companies to a nosebleed 20X their reported LTM earnings.

And those earnings surely embody a high water mark in a world where Japan is going down for the count, China’s house of cards is truly collapsing, Europe is plunging into a triple dip, and Wall Street’s spurious claim that 3% “escape velocity” has finally arrived in the US is soon to be discredited for the 5th year running. So it goes without saying that if “price discovery” actually existed in the Wall Street casino, the capitalization rate on these blatantly engineered earnings (i.e., inflated EPS owing to massive buybacks) would be decidedly less exuberant.

In truth, nothing has changed about the precarious state of the world since yesterday. Except… except the Great Bloviator at the ECB made another fatuous and undeliverable promise—this time that he would do whatever he “must to raise inflation and inflation expectations as fast as possible”; and, at nearly the same hour, the desperate comrades in Beijing administered another sharp poke in the eye to China’s savers by lowering the deposit rate to by 25 bps to 2.75%.

David Stockman goes supernova in this article that appeared on his website yesterday sometime---and today's first offering is courtesy of Roy Stephens.

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Jim Rickards: Why a US Rate Hike in 2015 Is Unlikely

Jim Rickards, chief global atrategist at West Shore Funds, says the US economy is still seeing below-trend growth and remains too weak to support an interest rate increase. Jim is also on record as saying that interest rates will never rise again.

This 3:32-minute CNBC video clip was posted on their Web site at 9:20 p.m. EST on Thursday evening---and it's courtesy of Harold Jacobsen.

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Doug Noland: Memories - of 2012 and 2007

At the “Core of the Core,” historic market euphoria has pushed excess in U.S. equities and corporate Credit to precarious extremes (relative to rapidly deteriorating global financial and economic fundamentals). Concerted global central bank stimulus measures have exacerbated the divergence between inflated securities prices and deflating prospects for global growth and profits. Worse yet, the redistribution of wealth that accompanies the policy-induced inflation of the “Global Financial Sphere” is worsening already alarming geopolitical tensions. Global central banking and “risk free” government debt are at risk of being discredited.

Why would I contemplate that central bank measures might be losing ability to keep the global Bubble afloat? Over recent weeks we’ve seen the concerted efforts of team Yellen, Draghi, Kuroda and the PBOC have minimal impact on the fragile “Periphery.” Even Friday, on the back of Draghi and the Chinese, crude oil gave back much of an earlier 2.6% gain to close the week up only 69 cents. The Goldman Sachs Commodities index was only slightly positive for the week near multi-year lows. Curiously, Italian CDS increased added a basis point this week. Greek CDS traded to a 13-month high Thursday. Eastern European currencies traded down again this week. Data out of Europe has been just dreadful. Ukraine looks dangerous.

The Mexican peso declined 60 bps this week, trading at the lowest level versus the dollar since the summer of 2012. Mexico succumbing to EM contagion would be a major development. Meanwhile, here at the Bubble’s “Core,” this week saw the S&P Homebuilding Index jump 3.9% and the Morgan Stanley Retail Index rise 2.1% (to a record high). Yet there were a few interesting Bloomberg headlines: “Riskiest Junk Borrowers Imperiled as Yields Jump…;” “Munis Facing First Losses of 2014 as Record Win Streak Imperiled;” “Corporate Bond Spread Versus Treasuries Widens to Most in 2014;” “Bond Record in Sight as Sales Near $4 Trillion.” Now that’s something to ponder: A record $4.0 TN of international corporate bond issuance in the face of a faltering global Bubble. Like many things these days, it brings back (bad) memories of 2007.

Doug's Credit Bubble Bulletin was posted on the prudentbear.com Internet site late on Friday evening---and it's always a must read. I found this item on my own before reader U.D. could send it to me.

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Widespread Flooding Ahead for Snowy Western New York: Officials

Warm temperatures and rain were forecast for the weekend in the city of Buffalo and western New York, bringing the threat of widespread flooding to the region bound for days by deep snow.

Areas where several feet of snow fell this week should brace for significant, widespread flooding, the National Weather Service warned on Friday.

Swept by lake effect storms, parts of western New York including Buffalo, received as much as seven feet (2 meters) of snow, an amount equal to a year's worth of accumulation for the region. Such storms occur when cold air moves across warmer Great Lake waters and can dump heavy snowfall when they hit land.

This Reuters article appeared on their Web site at 12:19 p.m. EST on Friday---and it's the second offering of the day from Roy Stephens.

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Bank of England Probes Whether Staff Helped Rig Money Auctions

The Bank of England has opened a formal investigation into whether its officials knew of -- and even facilitated -- the possible manipulation of auctions designed to inject money into the credit markets to alleviate the financial crisis.

The probe, which started in the summer, has been revealed just a week after the U.K. central bank published a report that criticised its own response to the foreign exchange rigging scandal.

The rest of this Financial Times story is subscriber protected---and I found it in a GATA release yesterday.

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The Siege of Julian Assange Is a Farce

The siege of Knightsbridge is a farce. For two years, an exaggerated, costly police presence around the Ecuadorean embassy in London has served no purpose other than to flaunt the power of the state. Their quarry is an Australian charged with no crime, a refugee from gross injustice whose only security is the room given him by a brave South American country. His true crime is to have initiated a wave of truth-telling in an era of lies, cynicism and war.

The persecution of Julian Assange must end. Even the British government clearly believes it must end. On October 28, the deputy foreign minister, Hugo Swire, told Parliament he would "actively welcome" the Swedish prosecutor in London and "we would do absolutely everything to facilitate that". The tone was impatient.

The Swedish prosecutor, Marianne Ny, has refused to come to London to question Assange about allegations of sexual misconduct in Stockholm in 2010 - even though Swedish law allows for it and the procedure is routine for Sweden and the U.K. The documentary evidence of a threat to Assange's life and freedom from the United States - should he leave the embassy - is overwhelming. On May 14 this year, U.S. court files revealed that a "multi subject investigation" against Assange was "active and ongoing".

This essay by John Pilger was posted on the Asia Times Web site on Monday---and I thank UK reader Tariq Khan for sending it.  For obvious reasons, it had to wait for today's column.

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Dutch Had Euro-Exit Plan at Height of Crisis

Details have emerged indicating that both the Dutch and German governments were preparing emergency plans for a return to their national currencies at the height of the euro crisis.

In early 2012, a few months after the then Greek prime minister Georgios Papandreou and his Italian counterpart Silvio Berlusconi had resigned, the Dutch finance ministry prepared for a scenario in which the Netherlands could return to its former currency.

Dutch TV documentary programme Argos Medialogica reported on Tuesday (18 November), based on anonymous sources, that the ministry had an emergency plan called Florijn, a reference the original name of the guilder, the Netherlands' pre-euro coin.

Current finance minister Jeroen Dijsselbloem also confirmed the existence of the plan on Tuesday in his weekly interview with RTLZ.

This very interesting article was posted on the euobserver.com Internet site at 9:53 a.m. Europe time on their Friday morning---and it's another offering from Roy Stephens.

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Draghi Throws ECB Door Open to Money Printing as Global Prospects Dim

European Central Bank President Mario Draghi threw the door wide open on Friday for more drastic measures to prevent the euro zone from sliding into deflation, promising to use whatever means necessary as China also acted to boost its sagging economic growth.

With many fearing the euro zone could be heading for a Japanese-style lost decade of deflation and recession, Draghi's remarks were reminiscent of when he pulled the bloc back from possible disintegration in 2012 by promising to do "whatever it takes" to back the common currency.

Painting a bleak picture of the state of the 18 countries in the euro bloc, Draghi stressed that "excessively low" inflation had to be raised quickly.

In a blunt message, he said there was now no sign of improvement in the months ahead and the ECB would pump more money into the euro bloc if its current measures fell short.

This Reuters piece, filed from Frankfurt at 2:35 p.m. EST yesterday, is courtesy of West Virginia reader Elliot Simon---and it's definitely worth reading.

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Poroshenko Gets Booed During Wreath-Laying at ‘Heavenly Hundred’ Memorial

On Friday activists booed Ukraine’s President Petro Poroshenko as he attended a wreath-laying ceremony at the ‘heavenly hundred’ memorial erected on Institutskaya Street in Kiev.

This Friday Ukraine celebrates the one-year anniversary of the beginning of the pro-Eurointegration protests last year that culminated in a putsch which ousted President Viktor Yanukovich. The people killed during the protests on Institutskaya Street were nicknamed “the heavenly hundred.” US Vice President Joe Biden, who is in Kiev to discuss offering assistance to Ukraine, was slated to participate in the ceremony but changed plans at the last minute. Biden is only the last in a series of US officials who went out of their way to show support for the protesters and the regime that they subsequently installed.

“Shame [on you]!”, “You’re awarding our heroes posthumously!” chanted the crowd that assembled on Friday, which included some of the relatives of the dead. One of the activists pointed out that those wounded during the February clashes at Maidan Square didn’t receive the special status that would’ve provided them with free access to the social and medical assistance they require.

Poroshenko made an attempt to calm the crowd but failed, and was forced to leave the ceremony amid the angry shouting.

This news item, filed from Moscow, appeared on the sputniknews.com Internet site at 3:31 p.m. Moscow time yesterday afternoon---with was 7:31 a.m. EST.  I thank Roy Stephens for sending it.  The france24.com Internet site carried a similar story on Friday.  It was headlined "Ukraine’s Poroshenko heckled at anniversary of Kiev protest"---and it's courtesy of South African reader B.V.

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US Congress to Pressure for Lethal Military Aid to Ukraine: Senator McCain

The newly elected U.S. Congress will pass resolutions and apply pressure to U.S. President Barack Obama to provide Ukraine with lethal military assistance, U.S. Senator John McCain told Sputnik news in a Friday interview.

"We [Congress] will be talking a lot about it. We will pass resolutions. We will put every amount of pressure we can on this recalcitrant administration," McCain said when asked about the Obama administration's ongoing refusal to provide lethal military aid to the government in Kiev.

The Senator, who is expected to assume the chairmanship of the Senate Armed Services Committee in 2015, does not know whether the efforts by Congress will be successful.

Whether the issue creates a major clash between the executive and legislative branches of the US government will "depend on whether they [the Obama administration] will see reality or not," McCain said.

This story, filed from Washington, was posted on the sputniknews.com Internet site at 7:31 p.m. EST on Friday evening---and it's another offering from Roy Stephens.

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Russia Warns US Against Supplying ‘Lethal Defensive Aid’ to Ukraine

Moscow has warned Washington a potential policy shift from supplying Kiev with “non-lethal aid” to “defensive lethal weapons”, mulled as US Vice President visits Ukraine, would be a direct violation of all international agreements.

A Russian Foreign Ministry spokesperson said that reports of possible deliveries of American “defensive weapons” to Ukraine would be viewed by Russia as a “very serious signal.”

“We heard repeated confirmations from the [US] administration, that it only supplies non-lethal aid to Ukraine. If there is a change of this policy, then we are talking about a serious destabilizing factor which could seriously affect the balance of power in the region,” Russian Foreign Ministry spokesman Aleksandr Lukashevich cautioned.

This news item was posted on the Russia Today Internet site at three minutes after midnight on Friday morning in Moscow---and I thank reader M.A. for his first contribution of the day.

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John Batchelor Interviews Stephen F. Cohen on the Crisis in Ukraine

Few people in the world are more qualified to speak about the Ukraine and Russia than Stephen F. Cohen, NYU and Princeton professor Emeritus.

This 39:45-minute audio interview was posted on the johnbatchelorshow.com Internet site on Tuesday---and for length and content reasons, had to wait for today's column.  I thank Larry Galearis for bringing it to our attention.  It's worth your while if you have the time---and interest.

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Russia Signs Deal with Ukraine to Deliver Nuclear Fuel for 2015: Rosatom

Russia has signed a contract with Ukraine to deliver nuclear fuel for the country's nuclear energy plants in 2015, the head of Russian nuclear agency Rosatom said Friday.

"A contract for 2015 has been signed to deliver fuel for Ukraine's nuclear energy facilities," Sergei Kirienko said in a speech before a student assembly in Moscow.

The head of the Russian nuclear agency stressed that supplies of nuclear fuel to Ukraine had not been held up even once and shipments have been delivered to Ukraine as scheduled.

In September, Ukraine gave the green light to its nuclear power plants to receive supplies of upgraded nuclear fuel from the U.S. company Westinghouse, a move criticized by Rosatom as a political one.

Well, I sure hope the Russian company is getting paid up front for this, as I wouldn't want to extend a nickel's worth of credit to Ukraine right now.  This article appeared on the sputniknews.com Web site at 2:24 p.m. Moscow time on their Friday afternoon, which was 6:24 a.m. EST.  It's courtesy of reader M.A., for which I thank him.

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Pepe Escobar: Washington Plays Russian Roulette

These are bleak times. I've been in serious conversation with some deep sources and interlocutors - those who know but don't need to show off, privileging discretion. They are all deeply worried. This is what one of them, a New York strategic planner, sent me:

The propaganda attack against Putin equating him with Hitler is so extreme that you have to think that the Russians cannot believe their ears and cannot trust the United States anymore under any circumstances.

I cannot believe how we could have gotten ourselves into this situation to protect the looters in the Ukraine that Putin would have rid the Ukraine of, and even had the gall to place in a leadership role one of the worst of the thieves. But that is history. What is certain is that MAD [mutually assured destruction] is not a deterrent today when both sides believe the other will use nuclear weapons once they have the advantage and that the side that gains a decisive advantage will use them. MAD is now over.

That may sound somewhat extreme - but it's a perfectly logical extension, further on down the road, of what the Russian president intimated in his already legendary interview with Germany's ARD in Vladivostok last week: the West is provoking Russia into a new Cold War.

This absolute must-read commentary by Pepe was posted on the Asia Times Web site yesterday sometime---and the first person through the door with this essay was reader M.A.

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Serbia Won’t Join Anti-Russian Sanctions Club Despite EU Pressure - Nikolic

Serbia is not planning to impose sanctions on Russia, said its President Tomislav Nikolic after meeting E.U. Commissioner Johannes Hahn. The latter said the EU expects Serbia to bring its policy in line with the European one if it seeks to enter the union.

Nikolic said that Serbia is not planning to introduce sanctions at the moment, though admitting the country is seeking E.U. membership which implies an obligation to pursue common policies, including foreign.

"What I heard from Hahn is the same what you have heard from him: Serbia is not an E.U. member and it can be independent in pursuing its foreign policy; but E.U. membership would have implied a commitment to pursue a common foreign policy," the President said at a media conference after talks with Hahn, E.U. Commissioner for Enlargement and Good-Neighbourly Relations visiting Belgrade on Thursday.

This is a follow-up story to the one I posted about this subject in yesterday's column.  It appeared on the Russia Today Web site at 7:40 p.m. Thursday evening Moscow time---and I thank reader M.A. for digging it up for us.

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In a Shift, Obama Extends US Role in Afghan Combat

President Obama decided in recent weeks to authorize a more expansive mission for the military in Afghanistan in 2015 than originally planned, a move that ensures American troops will have a direct role in fighting in the war-ravaged country for at least another year.

Mr. Obama’s order allows American forces to carry out missions against the Taliban and other militant groups threatening American troops or the Afghan government, a broader mission than the president described to the public earlier this year, according to several administration, military and congressional officials with knowledge of the decision. The new authorization also allows American jets, bombers and drones to support Afghan troops on combat missions.

In an announcement in the White House Rose Garden in May, Mr. Obama said that the American military would have no combat role in Afghanistan next year, and that the missions for the 9,800 troops remaining in the country would be limited to training Afghan forces and to hunting the “remnants of Al Qaeda.”

The decision to change that mission was the result of a lengthy and heated debate that laid bare the tension inside the Obama administration between two often-competing imperatives: the promise Mr. Obama made to end the war in Afghanistan, versus the demands of the Pentagon that American troops be able to successfully fulfill their remaining missions in the country.

Since this story appeared on the New York Times Web site, I'm not sure how much of this is real---and how much is made up---so if you decide to read it, do so with an open mind.  I thank Roy Stephens for sending it to me late yesterday evening.

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Russia and China: Akin to Porcupines Mating

That was how the slow and careful rapprochement between Russia and China has been described by Eric Margolis, one of my favorite geopolitical writers.

US shenanigans in Eastern Europe and the East China Sea—fomenting so-called colored revolutions in Ukraine and Georgia (both on Russia’s periphery) and egging on China’s neighbors to make aggressive territorial claims—have pushed the Russian bear and Chinese dragon together. In May, the two uneasy neighbors reached a de facto alliance represented by a 20-year, $400 billion deal for Russia to supply China with natural gas.

A Russia/China alliance shifts the Earth’s geopolitical axis. Historians may look back at the energy deal as the moment the post-Cold War era and the US’s singular position came to an end. The Russia/China team is now a consequential economic and military counterweight to the US. It will operate as an attractant for every country and every faction that for any reason resents the US’s giant footprint in world affairs.

This short, but worthwhile commentary appeared on the International Man Web site the other day.

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Futures Soar on Surprise Chinese Rate Cut

Moments ago, as traditionally is the case, the Chinese central bank caught the world by surprise and cut rates, notably the deposit rate by 25 bps and the lending rate by 40 while allowing banks to offer interest of 1.2 times the benchmark rate.

This happens as many analysts had been calling for more easing from China for months to help stabilize the faltering economy, but also happens a day after as Bloomberg reported, "Distressed Debt in China? Ain’t Seen Nothing, DAC Says." Basically well over a year after promising deleveraging reforms and a lower trend line growth rate, one which would not see incremental monetary stimulus, Xi Jinping threw in the towel and joined Japan and Europe in aggressively pursuing greener pastures.

It also means that, as expected, China is now clearly paying attention to Japan's unprecedented currency destruction and as Albert Edwards noted a few weeks ago, now that China has finally broken the seal, it is only a matter of time before China also devalues its currency outright.

This Zero Hedge article from early Friday morning EST is definitely worth your while---and I thank reader M.A. for his final contribution to today's column.

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China Building South China Sea Island Big Enough for Airstrip: Report

Satellite images show China is building an island on a reef in the disputed Spratly Islands large enough to accommodate what could be its first offshore airstrip in the South China Sea, a leading defense publication said on Friday.

The construction has stoked concern that China may be converting disputed territory in the mineral-rich archipelago into military installations, adding to tensions waters also claimed by Taiwan, Malaysia, the Philippines, Vietnam and Brunei.

IHS Jane's said images it had obtained showed the Chinese-built island on the Fiery Cross Reef to be at least 3,000 meters (1.9 miles) long and 200-300 meters (660-980 ft) wide, which it noted is "large enough to construct a runway and apron."

The building work flies in the face of U.S. calls for a freeze in provocative activity in the South China Sea, one of Asia's biggest security issues. Concern is growing about an escalation in disputes even as claimants work to establish a code of conduct to resolve them.

This Reuters article, filed from Washington, showed up on their Web site at 3:20 p.m. EST on Friday---and it's the final contribution of the day from Roy Stephens---and I thank him on your behalf.

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The Fall of the Roman Republic

In 133 B.C., Rome was a democracy.  Little more than a hundred years later it was governed by an emperor. This imperial system has become, for us, a by-word for autocracy and the arbitrary exercise of power.

At the end of the second century B.C. the Roman people was sovereign. True, rich aristocrats dominated politics. In order to become one of the annually elected 'magistrates' (who in Rome were concerned with all aspects of government, not merely the law) a man had to be very rich.

Even the system of voting was weighted to give more influence to the votes of the wealthy. Yet ultimate power lay with the Roman people. Mass assemblies elected the magistrates, made the laws and took major state decisions. Rome prided itself on being a 'free republic' and centuries later was the political model for the founding fathers of the United States.

By 14 A.D., when the first emperor Augustus died, popular elections had all but disappeared. Power was located not in the old republican assembly place of the forum, but in the imperial palace. The assumption was that Augustus's heirs would inherit his rule over the Roman world - and so they did.

This was nothing short of a revolution, brought about through a century of constant civil strife, and sometimes open warfare. This ended when Augustus - 'Octavian' as he was then called - finally defeated his last remaining rivals Mark Antony and Cleopatra in 31 B.C. and established himself on the throne. Why did this revolution happen?

This very interesting history lesson from 2,000 years ago when laid over what's happening in the U.S., is pretty stark.  It's posted on the bbc.co.uk Internet site---and I lifted it from yesterday's edition of the King Report.  Another history lesson for the same period is also one that I also borrowed from yesterday's King Report and it's linked here.  In some respects, it's a better story than the one I've posted above.

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'Immoral but Not Illegal': Metal Warehousing Games in the Spotlight

Complex deals employed by Goldman Sachs' metals storage unit to build vast stockpiles and then maintain queues test the spirit of the London Metal Exchange operating code, shocking many traders and confirming others' suspicions.

But the intricate transactions that saw Metro International Trade Services shell out millions of dollars to customers to join exit queues to bolster rental income was within the rules, according to two senior warehousing executives and two veteran traders.

An explosive U.S. Senate report released on Wednesday revealed the "imaginative" methods used to lure millions of tons of aluminum into Detroit, Metro's headquarters, and then keep it there over the past four years.

You know that if either G.S. or JPM is involved, it's "immoral, but not illegal"---and in some cases its both.  The disturbing must-read article appeared on the Reuters Web site at 4:23 a.m. EST on Friday morning---and I found it on the gata.org Internet site.

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Citing Risks, Fed May Limit Wall Street Role in Commodities

The Federal Reserve may curtail Wall Street commodity businesses after lawmakers said banks' role in energy, power, and metals markets spurred unfair trading advantages and could threaten financial stability.

At a Senate hearing today, Fed Governor Daniel Tarullo said curbs under consideration include ownership limits, restricting how much revenue can be derived from commodities, and requiring Wall Street firms to boost capital. He said the new rules, to be proposed early next year, could restrict banks from investing in oil tankers, coal mines, and other businesses involved in physical commodities.

"We are focusing on the risk to safety and soundness presented by specific activities and on whether those risks can be appropriately and adequately mitigated," Tarullo said at the hearing held by the Senate Permanent Subcommittee on Investigations.

This Bloomberg news item, filed from Washington, was posted on their Web site at 10:40 a.m. Denver time yesterday morning---and I found it embedded in a GATA release.

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Sprott Money Weekly Wrap-Up with Eric Sprott

Eric talks about the Surge in Asian Investment Gold Demand, the Positive Movement in Physical Gold Demand Around the World, and the Possible Impact of the Swiss Referendum on the Physical Gold Market.

This 9:32-minute audio interview conducted by Jeff Rutherford was posted on the sprottmoney.com Internet site on Friday.

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Financial Times' Gillian Tett Notes Greenspan's Renewed Endorsement of Gold

A decade ago, when Alan Greenspan was chairman of the mighty Federal Reserve, he was infamous for delivering ambiguous, Delphic speeches that nobody could understand. No longer. I recently had a chance to interview Greenspan, 88, at the Council on Foreign Relations, regarding an updated version of his latest book.

These days the retired Greenspan speaks so clearly that some of his words are still ricocheting around the blogosphere. For what he revealed on the CFR platform was that he harbours considerable doubts about whether recent Western monetary policy experiments have actually helped economic growth. He also fears that such experiments have been so wild that it will be very hard to exit from these policies in the future -- in the U.S. or anywhere else -- without sparking huge market volatility.

Indeed, Greenspan is so worried about future turbulence that he apparently sympathises with investors (and central banks) who are stocking up on gold.

Unfortunately, unless you're plugged into the Financial Times website, which is free if you only read a couple of articles a month, the balance of this story is subscriber protected.  There's nothing new in here, of course, as what Greenspan said at the Council on Foreign Relations is already well known---and I certainly covered it in this column.  What is interesting is that Gillian Tett, who is as Establishment as you can get, wrote this in the Financial Times of London on Friday.  So, from that perspective, it's a big deal---and wouldn't have shown up there without the approval of the senior editor.  This is another gold-related news item that I found at the gata.org Web site yesterday---and the actual FT headline reads "Gold: Worth Its Weight?"

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Ronan Manly: Swiss Gold Vote Likely Tighter Than Polls Suggest

GoldCore analyst and GATA consultant Ronan Manly provides a detailed analysis of the opinion polls that seem to be moving against the Swiss Gold Initiative, and he raises a compelling question: While the Swiss National Bank complains that the initiative would severely limit its monetary policy options, the initiative gives the bank five years for compliance, so just how long does the bank intend to chain the Swiss franc to a depreciating euro?

Manly's commentary is headlined "Swiss Gold Vote Likely Tighter than Polls Suggest"---and it's posted at the goldcore.com Internet site.  It's on the longish side, dear reader, but definitely worth reading if you have the time---and/or the interest.  I thank Chris Powell for wordsmithing "all of the above."

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Sprott's Thoughts: Paul Wilson, CEO, World Platinum Investment Council

Paul Wilson recently took up the role of Chief Executive Officer at the newly created World Platinum Investment Council (WPIC). The Council was launched by a group of six platinum producers in South Africa, in order to further develop the global market for platinum investment.

Readers may know that our affiliate Sprott Asset Management LP manages one of the largest above-ground stockpiles of platinum in the world, in the form of the Sprott Platinum and Palladium Trust (NYSE: SPPP).

What will the World Platinum Investment Council do? Their CEO Paul Wilson was kind enough to call me up and tell me what it’s all about.

This very interesting 'interview' appeared on the sprottglobal.com Internet site yesterday---and it was  'conducted' by Henry Bonner.  Of course the obvious reason that platinum prices are not rising is because its price is being managed like the other three precious metals.  I read this commentary---and that crucial fact is nowhere to be found.  Either the question was never asked, or the information wasn't volunteered.  How typical.

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MMTC-PAMP India Awaiting Government Nod for Gold Metal Scheme

In a move which will it hopes will in some way help resolve India’s 'insatiable appetite’ for gold and the attendant problems with the high current account deficit (CAD), MMTC-PAMP, a 27:73 per cent joint venture between India’s largest bullion importer MMTC and Swiss PAMP SA, is ready with its gold metal account scheme to mobilize gold from small consumers who account for a bulk of gold demand.

The minimum deposit will be around 50 grams of gold and that will address more than 90 per cent of gold consumers in India, Rajesh Khosla, managing director, MMTC-PAMP India told this correspondent.

The scheme would help small retail gold consumers, deposit their gold, melt it and earn interest on it and accrue gold instead of rupees in the account at the time of maturity. On the implementation of the scheme, Mr. Khosla said the Reserve Bank of India (RBI) would submit its views in early December after which the government would take a call on the scheme.

Well, 'scheme' is the operative word in this story---as Manitoba reader U.M. carefully pointed out when she sent me this article yesterday.  Filed from Mumbai, it was posted on thehindu.com Internet site at 7:53 p.m. IST on their Friday evening.

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Indian Central Bank Cautious on Response to Gold Import Surge

The Reserve Bank of India, grappling with a surge in gold imports last month, could support some restrictions for trading houses but two senior policymakers involved in the bank's decision-making said officials were also wary of overreacting. 

A senior finance ministry source told Reuters on Tuesday the country would soon announce measures set to center on import restrictions for private trading house that were eased earlier this year. Private jewellery exporters account for the bulk of demand for gold.

But the country has yet to announce any steps, and the two policymakers said on Friday there was no agreement yet. "No decision has yet been taken on curbing gold imports," said one of the policy makers, who declined to be named.

This Reuters article, also filed from Mumbai, showed up on their Web site at 7:51 p.m. IST on their Friday evening---and it's another gold-related story I found on the gata.org Internet site.

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Nov 21, 2014

New Scrutiny of Goldman’s Ties to the New York Fed After a Leak

From his desk in Lower Manhattan, a banker at Goldman Sachs thumbed through confidential documents — courtesy of a source inside the United States government.

The banker came to Goldman through the so-called revolving door, the symbolic portal that connects financial regulators to Wall Street. He joined in July after spending seven years as a regulator at the Federal Reserve Bank of New York, the government’s front line in overseeing the financial industry. He received the confidential information, lawyers briefed on the matter suspect, from a former colleague who was still working at the New York Fed.

The previously unreported leak, recounted in interviews with the lawyers briefed on the matter who spoke anonymously because the episode is not public, illustrates the blurred lines between Wall Street and the government — and the potential conflicts of interest that can result. When Goldman hired the former New York Fed regulator, who is 29, it assigned him to advise the same type of banks that he once policed. And the banker obtained confidential information, along with several publicly available facts, in the course of assignments from his bosses at Goldman, the lawyers said.

This news item appeared on The New York Times website at 9:10 p.m. EST on Wednesday evening---and I found it embedded in a GATA release yesterday morning.  It's worth reading.

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A Quick Look at Goldman's Takeover of the U.S. Judicial System: N.Y. Fed Edition

Moments ago, in the aftermath of the latest scandal involving Goldman's Rohit Bansal getting material information from a NY Fed employee, finally admitted that the original Carmen Segarra "whistleblower" allegations, namely that there was a material weakness (as in it is non-existent) when it comes to the NY Fed's supervision of TBTF banks, by which we mean Goldman Sachs here, were founded and valid when at 4pm on the dot the NY Fed released this:

The Federal Reserve Board on Thursday announced two separate reviews that are underway at the Federal Reserve System to ensure that the examinations of large banking organizations are consistent, sound, and supported by all relevant information.

This Zero Hedge commentary from yesterday is worth your while as well---and it showed up on their Internet site at 4:43 p.m. yesterday afternoon EST---and I thank Washington state reader S.A. for sending it.  There was a similar story in the Financial Times which I found in a GATA release yesterday.  It's headlined "On the night before hearing, Fed asks if it's too much the tool of investment banks".

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Here we go again: More snow for buried N.Y.

Upstate New York is about to be inundated, again, with something chilling: Snow. Meteorologists are predicting another three feet on top of the five-feet-plus already burying Buffalo.

Gov. Andrew Cuomo is calling the early-season snow that has blanketed northern New York and killed seven people a "historic event" that's bound to break records. Deaths have also been reported in Maine, Michigan and elsewhere in the U.S., bringing the toll so far linked to the extreme weather to 20.

Some Buffalo-area residents have been trapped in their snow-bound cars or homes for almost two days. Some 140 miles of Interstate 90, the main artery running across New York, remained closed, from Rochester to the New York-Pennsylvania state line.

This amount of snow if almost unimaginable---and  an 'historic event' it is. This story was posted on the upi.com Internet site at 4:36 a.m. EST on Thursday morning---and it's the first offering of the day from Roy Stephens.

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Wall Street Stunned as Iceland Dares to Jail Banker Involved in 2008 Crash

The impossible is possible. Never say never.

Wall Street bankers are staring agog at headlines coming from Europe where, in Iceland, the former chief executive of one of the largest banks in the country which was involved in crashing the economy in 2008 has been sentenced to jail time.

As Valuewalk reports, in receiving a one year prison sentence, Sigurjon Arnason officially became the first bank executive to be convicted of manipulating the bank’s stock price and deceiving investors, creditors and the authorities between Sept. 29 and Oct. 3, 2008, as the bank’s fortunes unwound, crashing the economy with it.

It appears he was as shocked by the verdict as Wall Street-ers are, "this sentence is a big surprise to me as I did nothing wrong."

Of course all bankers are as pure as the freshly fallen snow---and it would take no time at all to fill up the world's jails with the crooks inside the world's banking community.  This Zero Hedge article appeared on their website at 10:02 p.m. last night EST---and I thank Harry Grant for sending it our way late last night.

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American-born London mayor refuses to pay U.S. taxes, threatens to renounce citizenship

The Internal Revenue Service reportedly wants London Mayor Boris Johnson to write a check for taxes he owes to the United States government, but the UK politician says he isn’t paying.

Johnson, 50, has been the mayor of London since 2008 and is considering a bid at Parliament in the near future. In the meantime, however, he might soon find himself in hot water on the other side of the pond. Johnson, who was born in New York but moved at the age of five, told NPR host Susan Page during an interview last week that the US wants him to pay a capital gains tax owed by American citizens who earn income abroad.

Previously, Johnson wrote in a 2006 column that he was “getting a divorce from America” and would renounce his citizenship, noting “for years I have travelled exclusively on a British passport,” and not the US-issued one he also holds. That threat failed to materialize, but a question emailed to the mayor while he was being interviewed by NPR recently might have rekindled his interest — and without a doubt revealed another issue that has peculiarly pitted Johnson against the IRS.

“It is very hard but I will say this: the great United States of America does have some pretty tough rules, you know,” Johnson said. “You may not believe this but if you're an American citizen, America exercises this incredible doctrine of global taxation, so that even though tax rates in the UK are far higher and I'm Mayor of London, I pay all my tax in the UK and so I pay a much higher proportion of my income in tax, then I would if I lived in America.”

This very interesting story put in an appearance on the Russia Today website at 5:26 p.m. Moscow time on their Thursday afternoon, which was 9:26 a.m. in New York.  It's the second offering of the day from Roy Stephens.

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‘Diabolical and absurd’: Outrage as 'Save the Children' gives Tony Blair Global Legacy Award

A decision by UK charity Save the Children to give Tony Blair its annual Global Legacy Award has unleashed a torrent of criticism highlighting the former PM’s role in Britain’s 2003 Iraq war and his controversial business dealings in the Middle East.

The former Labour leader, who is currently a key focus of a public inquiry into Britain’s invasion of Iraq, received the honor on Wednesday night at a star-studded gala hosted by the charity in New York.

Save the Children’s decision to offer Blair the award has provoked outrage across the UK, with critics insisting the move utterly discredits the charity.

This article was posted on the Russia Today Internet site at 6:17 p.m. Moscow time on their Thursday evening---and once again I thank Roy Stephens for sharing it with us.

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UKIP's Reckless wins Rochester and Strood seat

UKIP has its second elected MP at Westminster after Mark Reckless won the Rochester and Strood by-election.

Mr Reckless received 16,867 votes, 2,920 more than Conservative candidate Kelly Tolhurst's 13,947, with Labour's Naushabah Khan third on 6,713.

The Green Party came fourth, while the Lib Dems got their lowest total ever.

Mr Reckless, whose defection from the Tories to UKIP triggered the contest in Kent, said: "If UKIP can win here, we can win across the country."

This news item appeared on the bbc.com Internet site at 2:42 a.m. EST this morning---and I thank Harry Grant for his second contribution to today's column.

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Dutch government refuses to reveal ‘secret deal’ into MH17 crash probe

The Dutch government has refused to reveal details of a secret pact between members of the Joint Investigation Team examining the downed Flight MH17. If the participants, including Ukraine, don’t want information to be released, it will be kept secret.

The respected Dutch publication Elsevier made a request to the Dutch Ministry of Security and Justice under the Freedom of Information Act to disclose the Joint Investigation Team (JIT) agreement, along with 16 other documents. The JIT consists of four countries - the Netherlands, Belgium, Australia and Ukraine - who are carrying out an investigation into the MH17 disaster, but not Malaysia. Malaysian Airlines, who operated the flight, has been criticized for flying through a war zone.

Part of the agreement between the four countries and the Dutch Public Prosecution Service, ensures that all these parties have the right to secrecy. This means that if any of the countries involved believe that some of the evidence may be damaging to them, they have the right to keep this secret.

“Of course [it is] an incredible situation: how can Ukraine, one of the two suspected parties, ever be offered such an agreement?” Dutch citizen Jan Fluitketel wrote in the newspaper Malaysia Today.

Wow!  You couldn't make this stuff up!  This Russia Today news item was posted on their website at 12:41 p.m. Moscow time on their Thursday afternoon---and it's courtesy of reader 'h c'.  It's worth reading.

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French Shipbuilders Float Out Second Mistral-Class Warship for Russia

Second Mistral-class amphibious assault ship built in France under contract with Russia was floated out Thursday, a RIA Novosti correspondent reported.

The helicopter carrier, named the Sevastopol, left its dry dock in the French port city of Saint-Nazaire before just a few onlookers, our correspondent noted.

Russia and France signed the $1.5 billion deal for two Mistral-class ships in June 2011. The first carrier, the Vladivostok, is expected to join the Russian Navy by the end of this year, while the Sevastopol is due to arrive in Russia in 2015.

But the deal has been in jeopardy after the West slapped Russia with economic sanctions over Ukraine. French President Francois Hollande in October threatened to suspend the deliveries of the ships, citing Russia’s alleged involvement in the Ukrainian conflict — a claim that Moscow has repeatedly denied.

This story appeared on the sputniknews.com Internet site at 8:28 p.m. yesterday evening Moscow time---and it's also courtesy of Roy Stephens.

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Polish farmers block road over Russian sanctions

Polish fruit farmers blocked a road near Annopol and in Leokadiow in Lubelskie province in the southeastern part of the country on Tuesday, calling for more support from the Polish government after being hit hard by the Russian food embargo. Protesters brought traffic to a halt, moving along a crosswalk with banners, flags and placards.

In response to European sanctions, Russia imposed a one-year import ban on fresh produce from the EU in August. Prior to the embargo, Poland accounted for about 50 percent of apple imports to the Russian market.

The above two paragraphs are all there is to this brief news item that showed up on the Russia Today website at 3:50 p.m. Moscow time on their Wednesday afternoon.  Once again I thank Roy Stephens for sending it.

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Ukraine death toll rises to more than 4,300 despite ceasefire: U.N.

The death rate in the Ukraine conflict has increased in the past eight weeks despite the declaration of a ceasefire in September, the United Nations said on Thursday.

In total, more than 4,300 combatants and civilians have been killed in eastern Ukraine since pro-Russian rebels seized border regions in April. Nearly a million people have fled the area, with a surge in the past two months, the U.N. said.

Since a formal ceasefire was agreed by Ukraine, Russia and the rebels in early September, an average of 13 soldiers, rebels, and civilians had died every day, a report by U.N. human rights monitors said.

This Reuters article, filed from Geneva, appeared on their Internet site at 9:07 a.m. EST yesterday---and it's courtesy of reader M.A.

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Former Australian PM: Expanding NATO Was A Big Mistake

Why is it that top Western leaders seem to have a tendency toward wisdom only after leaving top office?

During Putin's visit to Australia for the G20 meeting former Australian P.M. Paul Keating gave an interview to Australian TV starkly critical of NATO.

He heavily criticized the West for making a serious error in extending NATO at the end of the Cold War.

He thinks that current events are a result of that flawed decision.

This interesting article appeared on the russia-insider.com website yesterday sometime---and it's courtesy of Roy Stephens once again.

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‘Blackmail’: E.U. trying to force Serbia into Russia sanctions club, says senior M.P.

The E.U.’s attempts to coerce Serbia into joining anti-Russian sanctions are nothing but blackmail, says the head of the State Duma Foreign Affairs Committee.

Presently the European Union is trying to force Serbia, which is not an E.U. member, to join their sanctions program. They are practically blackmailing Serbia: either it joins the sanctions against Russia or [the bloc] won’t see it as a country with a chance of joining the E.U.,” M.P. Aleksey Pushkov (United Russia) told reporters at a Thursday press conference in Moscow.

The problem for Serbia is that in any case it has no prospects for joining the EU anytime soon. Even if they join the anti-Russian sanctions now, they would simply succumb to blackmailers and no one would accept them in the E.U. in one year for doing this,” he added.

The comments came after E.U.’s Enlargement Commissioner Johannes Hahn said that Serbia would have to join E.U. sanctions against Moscow if it wants to be part of the European Union.

This is another article from the Russia Today website---and this one was posted there at 10:43 a.m. Moscow time on their Thursday morning, which was 2:43 a.m. EST.  Once again I thank Roy Stephens for bringing it to our attention---and it's certainly worth reading.

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China firm signs $12 billion deal to build Nigerian railway

A state-owned Chinese company has signed a $12 billion agreement to build a railway along Nigeria's coast that it billed as China's single largest overseas contract, state media said Thursday.

China Railway Construction Corp. Ltd. (CRCC) signed the official construction contract with the Nigerian government on Wednesday in Abuja, the Xinhua news agency said.

The Nigerian railway will stretch for 1,402 kilometres (871 miles) along the coast, linking Lagos, the financial capital of Africa's largest economy and leading oil producer, and Calabar in the east, according to the report.

The $11.97 billion deal marks China's largest single overseas contract project so far, it said, citing CRCC.

This interesting article, filed from Beijing, appeared on the france24.com Internet site at 8:45 a.m. Europe time on their Thursday morning, which was 2:45 a.m. in New York.  My thanks go out to South African reader B.V. for finding it for us.

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China manufacturing index dips to six-month low: HSBC

Manufacturing activity in China stagnated in November, British banking giant HSBC said Thursday (Nov 20), warning of "significant" pressures on the world's second-largest economy as its key purchasing managers' index (PMI) hit a six-month low.

HSBC's preliminary PMI for the month came in at the 50.0 breakeven point dividing expansion and contraction, the bank said in a statement. It was lower than October's 50.4 and was the weakest reading since May's 49.4, according to the bank's data.

The index tracks activity in China's factories and workshops and is a closely watched indicator of the health of the economy, a key driver of global growth.

Protracted easing in new export order growth led output to contract for the first time in six months, while lingering deflationary pressures suggested domestic demand remained insufficient, Qu Hongbin, HSBC's economist in Hong Kong, said in the statement.

This news story put in an appearance on the channelnewsasia.com Internet site at 11:39 a.m. Singapore time on their Thursday morning---and it's the second offering of the day from reader M.A.

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Oil industry risks trillions of 'stranded assets' on U.S.-China climate deal

Brazil's Petrobras is the most indebted company in the world, a perfect barometer of the crisis enveloping the global oil and fossil nexus on multiple fronts at once.

PwC has refused to sign off on the books of this state-controlled behemoth, now under sweeping police probes for alleged graft, and rapidly crashing from hero to zero in the Brazilian press. The state oil company says funding from the capital markets has dried up, at least until auditors send a "comfort letter".

The stock price has dropped 87pc from the peak. Hopes of becoming the world's first trillion dollar company have deflated brutally. What it still has is the debt.

Moody's has cut its credit rating to Baa1. This is still above junk but not by much. Debt has jumped by $25bn in less than a year to $170bn, reaching 5.3 times earnings (EBITDA). Roughly $52bn of this has been raised on the global bond markets over the last five years from the likes of Fidelity, Pimco, and BlackRock.

This longish, but must read article by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 9:52 p.m. GMT on their Wednesday evening---and it's the final offering of the day from Roy Stephens.  I thank him on your behalf, dear reader.

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Here Are The Highlights From The Senate's Finding That Banks Manipulate Physical Commodities

“One focus for the subcommittee is the management of Detroit-area metal warehouses run by Metro Trade Services International, the largest U.S. warehouse company certified to store aluminum warranted by the London Metal Exchange for use in settling trades.

Since Goldman bought Metro in 2010, Metro warehouses have accumulated up to 85 percent of the U.S. LME aluminum storage market...

Since Goldman took over the warehouses, the wait to withdraw LME-warranted metal has increased from about 40 days to more than 600 days, reducing aluminum availability and tripling the regional premium for storage and delivery costs...

The investigation revealed a number of previously unknown details about these deals: that Goldman’s warehouse company paid metal owners to engage in “merry-go-round” deals that shuttled metal from building to building without actually shipping aluminum out of Metro’s system; that the deals were approved by Metro’s board, which consisted entirely of Goldman employees; and that a Metro executive raised concerns internally about the appropriateness of such “queue management.

This news item was posted on the zerohedge.com Internet site at 9:28 a.m. EST yesterday---and it's courtesy of reader M.A.

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United States Mint resumes silver American Eagle sales Nov. 17 to satisfy voracious investor demand

Sales by the United States Mint to its authorized purchasers (APs) of 2014 American Eagle 1-ounce silver bullion dollar coins resumed Nov. 17, 12 days after being suspended because of a depleted inventory.

Sales resumed after the U.S. Mint was able to replenish its stockpile of coins. The U.S. Mint had 1,525,000 of the 2014 American Eagles silver dollars available Nov. 17 for APs to purchase on an allocation basis, and those purchasers bought 1,012,000 coins from the total allotted.

The U.S. Mint has experienced significantly increased investment demand over the past several weeks. Through the close of business Nov. 17, the Mint recorded cumulative sales of 40,393,000 of the silver American Eagles. Sales of the coins in 2014 are on track to break the 2013 sales record of 42,675,000 coins. (Cumulative sales may include coins minted in more than one year, so are not the same as yearly mintages.)

As I've said on many occasions all year long, this "investment demand" that they're talking about is NOT coming from John Q. Public.  That narrows it down to Ted Butler's Big Buyer.  This brief article appeared on the coinworld.com Internet site on Tuesday---and I thank reader Tolling Jennings for sharing it with us.

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Unusual gold moves in Asian hours puzzle jittery traders

Some of the biggest price moves in gold since late October have, unusually, occurred in Asian hours and traders more accustomed to following the lead of their Western counterparts suspect a big increase in algorithmic trading may be to blame.

Sensitivity to the dollar-yen exchange rate may also help explain the moves, although some traders speculated that the timing looked suspiciously like attempts to catch Chinese traders off-guard during their lunch break.

Liquidity in Asia tends to be thin until Europe wakes up but recent weeks have been different: COMEX gold futures, the busiest gold contract in the world, have suffered sharp sell-offs in Asia, sometimes sparked by the news flow or currency moves but often for no identifiable reason.

"I have spoken to a lot of people about it and the general consensus seems to be that there is a big increase in algorithmic and high-frequency trading in this time zone nowadays as it can be quite easy to push about," he said.

It's JPMorgan et al---probably hand-in-hand with the BIS---and I've been writing about this for years.  Only now does the main stream media get interested, but it's an absolute guarantee that they won't dig any deeper.  This Reuters article, filed from Singapore, appeared on their website at 2:05 a.m. EST yesterday morning---and I found it in a GATA release.

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Switzerland Net Exports 100 Tonnes of Gold in October

From looking at rising SGE withdrawals and Indian import in recent months, we knew demand was increasing consistently and huge amounts of physical gold had to be supplied from somewhere. As I’ve written in a previous post, this type of gold demand can’t be met by just mine supply and so the metal has to be sourced from countries that have large stockpiles, the usual suspects: the U.K., Hong Kong and Switzerland.

In 2013 the U.K. was severely drained (net 1,424 tonnes), last week we learned Hong Kong became a net exporter since August 2014, the latest trade data from Switzerland shows the Swiss net exported 100 tonnes of fine gold in October---75 tonnes net to India and 45 tonnes net to China.

Customs data of the usual suspects (Switzerland, the U.K. and Hong Kong) is getting exciting; they can’t net export gold forever. We know there are often shortages in these trading hubs, it’s only the price of gold that tells us otherwise.

The Financial Times reported there are currently shortages in London, from November 14:  As one refiner told me: “Over the past four weeks my cost of hedging has risen by 30 per cent. Not only that, but there is not enough liquidity in the physical market in London to settle my obligations as they come due. I have to fly gold from Zurich to London, because there just is not enough gold on offer in London. You never used to have to do that.”

The export numbers in the second paragraph don't add up, as 75 and 45 add up to 120 tonnes, so I'll be interested to see if Koos has an explanation for this in his next commentary.  This was posted on the bullionstar.com Internet site yesterday sometime---and despite the above issue, it's definitely worth reading.  I found it over at the gata.org Internet site.

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Netherlands TV network highlights Koos Jansen in program on gold

GATA consultant and Bullion Star market analyst Koos Jansen got a prominent place this week in a report on gold broadcast on the "Een Vendaag" ("One Today") news program of the Netherlands public television network, Nederland 1.

The program had a nationwide audience in the Netherlands. It covered the Swiss Gold Initiative, substantial gold buying by China and Russia, the German Bundesbank's attempt to repatriate its gold from the Federal Reserve Bank of New York, and the possibility of a transformation of the world financial system that would reintroduce gold in some form. The program is not quite 8 minutes long---and can be viewed at Bullion Star's Internet site.

The program is in Dutch but you can activate excellent English subtitles by clicking on the "CC" button at the bottom of the YouTube window---and there's a transcript as well.  This is another story I found on the gata.org Internet site---and it's worth your while.

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Dutch Bring 120 Tonnes of Gold Back to Amsterdam From New York

The Dutch central bank has secretly brought a large part of the national gold reserves being held in a secure depot in New York back to Amsterdam.

In total, 120 tonnes of gold valued at €4bn has been brought back to the Netherlands by ship, Nos television said.

The high security reparations for the move took months.

The central bank decided to bring some of its gold reserves back to the Netherlands to ensure a better spread, the bank said in a statement.

In addition, the bank hopes to boost consumer confidence by showing there is enough gold in the Netherlands to take the country through a new economic crisis.

So, why can't/won't Germany do the same thing.  This story was posted on the dutchnews.nl website this morning--and I found it on the Sharps Pixley website.

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Koos Jansen: The Netherlands Has Repatriated 122.5t Gold From the U.S.

A few weeks ago I heard a rumor that the Netherlands were repatriating some of their official gold reserves from the FRBNY. From one of my sources I even heard which security logistics company is shipping the metal, but I was kindly asked to not share this company’s name.

Last week I was approached by a financial journalist, Theo Besteman, from the biggest newspaper in The Netherlands, De Telegraaf. He asked me if I knew anything about the repatriation of Dutch gold from the FRBNY as he heard from several sources DNB was following the German central bank in repatriating gold (for the ones that are under the assumption Germany has ceased its repatriation program, please read this). I told him I heard some rumors about it and that the source was one of the big security logistics companies. He wanted to know which one, but I couldn’t tell him that. Apparently the rumors were true and Besteman did a good job finding out what was happening. The front page of De Telegraaf today: Gold Shipped In Utmost Secret.

De Telegraaf reports that for years there have been doubts at the DNB if the Dutch gold was still in New York. After a very secret and almost military operation DNB has shipped gold from Manhattan to Amsterdam, to bring about a more balanced allocation of its gold reserves and give the Dutchcitizensmore confidence by storing the goldon ownsoil to guidethe country, ifnecessary, through a following major crisis. In the previous weeks many armored trucks were seen at the DNB in Amsterdam.

The impact of the Dutch gold repatriation can be huge. First of all, because it underlines more and more countries are getting nervous about their gold reserves stored in the U.S.  Venezuela repatriated most of its reserves from abroad in 2012, the year Germany also announced a repatriation schedule from the US and France. While Germany settled with the US to ship 300 tonnes spread over 8 years, the Dutch set a new trend to insist on immediate delivery. If more counties will follow there can be a global run on gold.

This commentary by Koos is also one I plucked from the Sharps Pixley website this morning---and it's an absolute must read.  It was posted on the bullionstar.com Internet site late on their Friday evening.

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Gold-mining industry mostly under water, Gold Fields CEO says

Gold miners' costs are mostly higher than current spot prices, increasing the likelihood of write downs next year, according to Nick Holland, chief executive officer of Gold Fields Ltd.

Across the industry, costs are about $1,300 an ounce including debt repayments, Holland said by phone from Johannesburg today, citing analysts' research. Gold dropped 0.1 percent to $1,182 an ounce, bringing the decline since the beginning of 2013 to 29 percent.

"The industry by and large is under water," Holland said. "I would expect further write downs. Production I think will be curtailed but it will take some time to filter through the system."

Nick Holland certainly knows what's going on inside the gold market, but won't breath a word of it.  This Bloomberg story, filed from Johannesburg, showed up on their website at 12:44 a.m. Denver time yesterday morning---and it's another gold-related story I found on the gata.org Internet site.

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Nov 20, 2014

Treasury: Global Investors Pour Record Amount Into U.S.

The U.S. posted a record inflow of long-term portfolio investments in September as the dollar strengthened and foreign buyers accumulated corporate debt, Treasurys and agency securities.

Foreigners bought a net $164.3 billion in long-term financial assets after $52.1 billion in purchases in August, the Treasury Department said in a statement Tuesday in Washington. The previous record was an inflow of $139.7 billion in March 2010.

The figures suggest the U.S. is luring investors with economic growth that’s outpacing other developed nations, as the euro area faces low inflation and slack demand and Japan copes with a recession. The data also showed Americans are selling foreign securities at a record pace.

The U.S. is looking like the cleanest dirty shirt from a global perspective,” said Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York. “You had the U.S. actually lead the way in global growth, and a lot of people were attracted by that — they’re trying to keep their holdings more domestic.”

"Cleanest dirty shirt" pretty much sums it up, as does the phrase "the best looking horse in the glue factory."  Today's first news item was posted on the moneynews.com Internet site at 5:57 p.m. EST Wednesday afternoon---and it's courtesy of West Virginia reader Elliot Simon.

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Yellen Gets That Sinking Feeling Greenspan Once Knew

Alan Greenspan couldn’t control long-term interest rates a decade ago, and bond investors are betting Janet Yellen’s luck will be no better.

When then-Federal Reserve Chairman Greenspan raised the benchmark overnight rate from 2004 to 2006, long-term borrowing costs failed to increase, thwarting his attempts to tighten credit and curb excesses that contributed to the worst financial crisis in 80 years.

“We wanted to control the federal funds rate, but ran into trouble because long-term rates did not, as they always had previously, respond to the rise in short-term rates,” Greenspan said in an interview last week. He called this a “conundrum” during congressional testimony in 2005.

That same year, then-Fed Governor Ben S. Bernanke said a glut of investment dollars from overseas was holding down U.S. interest rates as savers in economies such as China sought safe places to stash their export earnings.

This Bloomberg article, filed from New York, appeared on their Internet site at 2:08 p.m. EST yesterday afternoon---and it's the second offering in a row from Elliot Simon.

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Editorial: In Mr. Obama’s own words, acting alone is ‘not how our democracy functions’

Democrats urging President Obama to “go big” in his executive order on immigration might pause to consider the following scenario:

It is 2017. Newly elected President Ted Cruz (R) insists he has won a mandate to repeal Obamacare. The Senate, narrowly back in Democratic hands, disagrees. Mr. Cruz instructs the Internal Revenue Service not to collect a fine from anyone who opts out of the individual mandate to buy health insurance, thereby neutering a key element of the program. It is a matter of prosecutorial discretion, Mr. Cruz explains; tax cheats are defrauding the government of billions, and he wants the IRS to concentrate on them. Of course, he is willing to modify his order as soon as Congress agrees to fix what he considers a “broken” health system.

That is not a perfect analogy to Mr. Obama’s proposed action on immigration. But it captures the unilateral spirit that Mr. Obama seems to have embraced since Republicans swept to victory in the midterm elections. He is vowing to go it alone on immigration. On Iran, he is reportedly designing an agreement that he need not bring to Congress. He already has gone that route on climate change with China.

The legal or constitutional case for each is different, but the rationales overlap: Congress is broken, so Mr. Obama must act. Two-thirds of Americans did not vote in the midterms, and the president must represent them, too. He has tried compromise, and the Republicans spurned him.

This 'up yours Mr. President' from The Washington Post's Editorial Board appeared on their website on Monday---and that makes it three in a row from Elliot Simon.

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Ice to close upper Mississippi from November 20, earliest on record

The shipping season on the upper Mississippi River will end on Thursday as ice surrounding locks and dams near Minnesota's Twin Cities forced the earliest winter closure on records that date back to 1969, the U.S. Army Corps of Engineers said.

"There's so much ice through the whole system," said Bryan Peterson, navigation manager for the Army Corps' St. Paul district. "They're getting the barges they can out and not risking getting stuck there all winter."

There were two tow boats waiting to pass lock and dam No. 2 near Hastings, Minnesota. Once they moved down river, no more vessels were expected, Peterson said.

The closure came as a blast of arctic air brought early snow and freezing temperatures across the United States.

This Reuters story, filed from Chicago, appeared on the news.yahoo.com Internet site about 8:45 CST last evening---and I found it all by myself!

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Jail threat is biggest deterrent for bad bankers, says Bank of England official

The threat of jail is a far more effective tool for reining in bad behaviour at banks than the prospect of losing bonuses, according to the Bank of England policymaker leading a review into financial market regulation.

Minouche Shafik told MPs that criminal sanctions “are top of the list in making them think twice, making them pay is further down the list”.

It came as a court in Iceland sentenced the former chief executive of Landsbanki, to 12 months in prison for market manipulation.

Sigurjon Arnason was convicted of manipulating the bank's share price and deceiving investors in the run up to the financial crisis that saw Iceland's banking system collapse.

At least someone agrees with me, but talk is cheap.  Will they walk the walk?  I found this story on the telegraph.co.uk Internet site at 6:41 p.m. GMT on Wednesday evening.

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Hungary to start South Stream construction in 2015 despite western pressure

Hungary plans to break ground next year on its stretch of the South Stream pipeline to send natural gas from Russia to Europe. It is in defiance of E.U. and U.S. calls to halt the project over frosty relations with Moscow.

One major reason Hungary has thrown its support into South Stream is the lack of a better option since the EU-backed Nabucco pipeline, which was supposed to deliver gas from Azerbaijan to Europe, failed.

"Nabucco will not be built and after nearly 10 years of hesitation, and especially in light of the Ukraine situation, we need to act. This is a necessity," Hungarian Energy Minister Andras Aradszki told Reuters.

This Russia Today story showed up on their Internet site at 4:45 p.m. Moscow time on their Wednesday afternoon, which was 8:45 a.m. EST.  My thanks go out to Roy Stephens for sending it.

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Ukraine's coal reserves 'unprecedented' low, not enough for another month - Deputy Energy Minister

Two out of ten coal-fired power plants in Ukraine only have enough stock for a few days, as the key coal mines supplying the plants are located in Donbass where Kiev and self-defense forces are fighting, says Ukraine's Deputy Energy Minister Yury Zyukov.

In 2012 and 2013 Ukraine extracted about 85 million tons of coal, of which 40 billion tons were used for domestically, Zyukov told Glavkom magazine, adding that previously Ukraine even exported coal.

“Situations as this one have never happened in the history of an independent Ukraine, we have never had such precedents.”

“Do you know that Zmiev TPP has 30 thousand tons of coal reserves and the Tripol TPP has 50 thousand? That is literally enough for just for a few days,” Zyukov said. “That is why we needed coal from South Africa - we have no reserves.”

This is another article from the Russia Today Internet site.  This one showed up on there at 4:09 p.m. Moscow time yesterday afternoon---and it's the second contribution in a row from Roy Stephens.

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Why the Western Hype of Fake Russian Invasions?

On Friday, the Ukrainian military’s P.R. machine spun-up its latest episode of the illusive “Russian Invasion”, this time accusing Moscow of dispatching a column of 32 tanks and “truckloads of Russian troops” into the country’s eastern region.

The West are being very choosy with their language – in case they have to deny they ever said it later. Presently, the West and Kiev are stopping short of labeling the non-event as an invasion, instead calling it “Russian aggression”, and a “cross-border incursion” to aid separatists, with the all-important caveat of “unconfirmed report”, a PR system standardized by CIA media handlers currently in residence inside the U.S.-backed Kiev regime.

Another ‘Russian Invasion’?

The timing, and the sheer desperation of this latest P.R. move is designed for one thing: deflecting public attention away from the fact that Ukrainian military have already broken the fragile ceasefire with rebels, as Kiev resumes its shelling of civilian areas around Donetsk and Lugansk.

This article, a repost from the 21stcenturywire.com Internet site back on November 8---appeared on the russia-insider.com Internet site just after midnight Moscow time on their Wednesday morning---and it's courtesy of South African reader B.V.  It's worth reading.

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The 'Caliphate's' Colonies: Islamic State's Gradual Expansion into North Africa

The caliphate has a beach. It is located on the Mediterranean Sea around 300 kilometers (186 miles) south of Crete in Darna. The eastern Libya city has a population of around 80,000, a beautiful old town and an 18th century mosque, from which the black flag of the Islamic State flies. The port city is equipped with Sharia courts and an "Islamic Police" force which patrols the streets in all-terrain vehicles. A wall has been built in the university to separate female students from their male counterparts and the disciplines of law, natural sciences and languages have all been abolished. Those who would question the city's new societal order risk death.

Darna has become a colony of terror, and it is the first Islamic State enclave in North Africa. The conditions in Libya are perfect for the radical Islamists: a disintegrating state, a location that is strategically well situated and home to the largest oil reserves on the continent. Should Islamic State (IS) manage to establish control over a significant portion of Libya, it could trigger the destabilization of the entire Arab world.

The IS puts down roots wherever chaos reigns, where governments are weakest and where disillusionment over the Arab Spring is deepest. In recent weeks, terror groups that had thus far operated locally have quickly begun siding with the extremists from IS.

In September, it was the Algerian group Soldiers of the Caliphate that threw in its lot with Islamic State. As though following a script, the group immediately beheaded a French mountaineer and uploaded the video to the Internet. In October, the "caliphate" was proclaimed in Darna. And last week, the strongest Egyptian terrorist group likewise announced its affiliation with IS.

This longish essay was posted on the German website spiegel.de at 7:20 p.m. EDT on their Tuesday evening---and it's courtesy of Roy Stephens. Normally I'd save this for the weekend, but it's a slow news day, so here it is now.

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Inside Islamic State’s oil empire: how captured oilfields fuel Isis insurgency

Islamic State has consolidated its grip on oil supplies in Iraq and now presides over a sophisticated smuggling empire with illegal exports going to Turkey, Jordan and Iran, according to smugglers and Iraqi officials.

Six months after it grabbed vast swaths of territory, the radical militant group is earning millions of dollars a week from its Iraqi oil operations, the U.S. says. Coalition air strikes against tankers and refineries controlled by Isis have merely dented – rather than halted – these exports, it adds.

The militants control around half a dozen oil-producing oilfields. They were quickly able to make them operational and then tapped into established trading networks across northern Iraq, where smuggling has been a fact of life for years. From early July until late October, most of this oil went to Iraqi Kurdistan. The self-proclaimed Islamic caliphate sold oil to Kurdish traders at a major discount. From Kurdistan, the oil was resold to Turkish and Iranian traders. These profits helped Isis pay its burgeoning wages bill: $500 (£320) a month for a fighter, and about $1,200 for a military commander.

The U.S. has pressured Iraqi Kurdistan’s leaders to clamp down on smuggling, with limited success. But oil is still finding its way to Turkey via Syria, with Islamic State deftly switching from one market to another, smugglers say, with cheap crude channelled to Jordan instead. On Monday, a U.N. panel urged countries neighbouring Iraq and Syria to seize oil trucks that continue to flow out from jihadist-occupied territory.

This essay appeared on The Guardian website at 1:06 p.m. GMT yesterday afternoon---and I thank reader B.V. for digging it up for us.

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Crashing Steel Prices Lead to Largest Chinese Bankruptcy, "Will Be Followed By Others"

With growth rates for steel products at or near record lows and prices for end-product having plunged to record lows, it is little surprise that the Steel industry would provide the largest Chinese bankruptcy yet in this cycle.

As Bloomberg reports, unlisted Haixin Iron & Steel - which halted production and defaulted on CNY3 bn in March - has started bankruptcy proceedings. Having spent 8 months hoping for the government bailout that every Western onlooker believes is every firm's god-given right, a reorganization application for the Wenxi, Shanxi province-based company (with $1.7 billion of total debt) was accepted by the Yuncheng City Intermediate People’s Court.

This is just the start as "Haixin Group’s bankruptcy will be followed by others," according to researcher Mysteel.com's Chief Analyst Xu Xiangchun.

This interesting article put in an appearance on the Zero Hedge website at 8:16 a.m. EST on Wednesday morning---and I thank reader 'David in California' for passing it around.

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Senate report criticizes Goldman and JPMorgan over their roles in commodities market

A two-year Senate-led investigation is throwing back the curtain on the outsize and sometimes hidden sway that Wall Street banks have gained over the markets for essential commodities like oil, aluminum, and coal.

The Senate's Permanent Subcommittee on Investigations found that Goldman Sachs and JPMorgan Chase assumed a role of such significance in the commodities markets that it became possible for the banks to influence the prices that consumers pay while also securing inside information about the markets that could be used by the banks' own traders.

Bankers from both firms, along with other industry executives and regulators, will testify about the allegations at hearings on Thursday and Friday.

The report provides an unprecedented level of detail about the enormous global operations the banks have built up in recent years since politicians and regulators lifted long-time curbs on banks owning physical commodities and infrastructure.

Of course this includes the precious metals, plus oil and copper.  This must read article put in an appearance on The New York Times website at 5:01 p.m. EST on Wednesday afternoon---and the first person through the door with it was U.K. reader Nigel Bunting.  There was also an AP story about it as well.  It appeared on the abcnews.go.com Internet site at 7:27 p.m. EST last evening.  It's headlined "Report: Role of 3 Big Banks in Commodities Risky"---and it's courtesy of Elliot Simon.

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CFTC Launches National Campaign to Protect Consumers from Financial Fraud

The U.S. Commodity Futures Trading Commission (CFTC) today launched CFTC SmartCheck, a new national campaign to help investors identify and protect themselves against financial fraud. The comprehensive campaign includes a new website, a national advertising campaign and interactive videos that will help investors spot investment offers that are potentially fraudulent. The new website, SmartCheck.CFTC.gov, unveiled today, is an educational tool that helps investors conduct background checks of financial professionals.

“The CFTC is committed to protecting investors from fraud, and we demonstrate that commitment today with the launch of CFTC SmartCheck,” said CFTC Chairman Tim Massad. “This campaign provides investors with new interactive tools that include the website as well as a targeted advertising campaign and collaborative outreach with allied organizations.”

Over the coming months, the CFTC SmartCheck campaign will include online, television, and print advertising slated to run nationwide and additional outreach efforts with organizations aligned with the CFTC’s mission to reduce financial and investment fraud. The campaign will also feature special events to reach investors and encourage them to use the online tools available at SmartCheck.CFTC.gov. In addition to the background-check tools, the SmartCheck.CFTC.gov website includes a range of information for investors, including interactive videos that help illustrate how to avoid fraud.

This news item showed up on the CFTC's website yesterday---and I found it embedded in silver analyst Ted Butler's mid-week commentary yesterday---and this was his scathing right-on-the-money comment on it.  "Here’s the latest announcement from the CFTC warning the public on financial fraud in commodities. Funny, there was no mention of the ongoing scam in COMEX silver which many thousands of market participants have written the agency about. I hate to be cynical but why does this seem like a perfect bureaucratic solution – instead of resolving a manipulation most everyone is aware of, come out instead with a public campaign to warn people of financial fraud in commodities. Marvelous."  I know what we should all do, dear reader, is click on the website and ask them to check out the precious metal price rigging scam on the COMEX.

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Gold Rush in Ohio? Small Town Plays Big Role

Building contractor Alan Stockmeister is known around town for his stewardship of local businesses: radio stations, a movie theater and a bank, for example. But nothing has been quite like his refinery just off Main Street, which has become an outpost in the multibillion-dollar global gold trade.

Ohio Precious Metals LLC owns one of five refineries in the U.S.—there are 73 world-wide—certified to melt scrap gold and pour it into ingots that can be traded on global markets. OPM’s more than 170 workers process several billion dollars a year in gold and silver headed for banks and jewelers in New York, London and Shanghai.

“Historically, gold refineries have been near production sites, mines or the big financial centers where gold is traded,” says David Jollie, a London-based analyst at gold trader Mitsui Precious Metals. Ohio “is not really one of those places.”

OPM has been able to stay in south-central Ohio in part because gold prices, while 30% below their 2011 peak, are about triple what they were in 2004. Sales of gold to make rings, watches and electronics have increased 70% over the last 10 years, according to Thomson Reuters GFMS. Recent price declines mean that gold production at mines hasn’t kept pace, in turn fueling demand for cheaper-to-produce gold scrap.

OPM is a well-known brand name in our store---and reader Ken Hurt sent this Wall Street Journal story our way yesterday

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Silver demand to fall 7% in 2014 – Thomson Reuters GFMS

Demand for silver will post a 7% decline in 2014 because of a slower pace of buying by jewellers and industrial fabricators in the first three quarters of the year, metals consultant Thomson Reuters GFMS said on Tuesday.    

Harmonized European sales tax rates that started in January have driven up retail silver investment product prices, reducing demand on the continent, the Thomson Reuters unit said in an interim market review.     

Thomson Reuters GFMS said it expected total physical demand, which includes jewellery, coins and bars, silverware and industrial fabrication, to fall 6.7% to 31,243.44 tonnes in 2014 from a record high of 33,498.44 tonnes last year.    

Silver industrial demand is forecast to drop 1.8% as the electronics sector keeps shifting to cheaper metals. Jewellery consumption should fall 4.4% because retailers are pushing more gold products to take advantage of lower bullion prices, GFMS said.     For the full year, Thomson Reuters GFMS now forecasts silver prices to average $19/oz an ounce, a 20% decline from $23.79/oz in 2013.

Since it was Gold Field Mineral Services that said this, I'd take this Reuters story with a big grain of salt.  It was picked up by the miningweekly.com Internet site yesterday---and I thank Malcolm Roberts for sharing it with us.

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Koos Jansen: Why did European central banks sell gold?

Focusing on the Netherlands Central Bank's reduction of its gold reserves, Bullion Star market analyst and GATA consultant Koos Jansen asks why the European central banks sold (or purported to sell) so much gold from the announcement of the Washington Agreement on Gold in 1999 through 2010, when such sales stopped almost completely. Jansen cites a comment by the Dutch treasury secretary in 2011 in support of his speculation that the gold sales may have been intended to help redistribute and equalize official gold reserves around the world.

This is exactly what the U.S. economists and fund managers Paul Brodsky and Lee Quaintance speculated in 2012 -- that central banks were moving their gold around so that nations would be better prepared for a complete resetting of the world financial system, in which gold would play an important part for building confidence.

Of course on a planet with actual financial journalism, mainstream news organizations would question central banks about this -- and about everything else central banks do. Since we're living on Earth, Jansen's citing the Dutch parliamentary archive and posing the question it suggests will have to suffice today.

This commentary by Koos is embedded in this GATA release from yesterday---and I thank Chris Powell for writing the above paragraphs of introduction.  It's worth reading.

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Support for Swiss gold referendum proposal weakens as campaign heats up

Support among Swiss voters for a referendum proposal that would force a huge increase in the central bank's gold reserves has slipped to 38 percent, an opinion poll showed on Wednesday, falling short of the majority backing it needs to become law.

Under the "Save our Swiss gold" proposal, the Swiss National Bank would be banned from selling any of its gold reserves and would have to hold at least 20 percent of its assets in the metal, compared with 7.8 percent last month. ...

Wednesday's poll, conducted by Berne-based research institute gfs.bern in partnership with Swiss broadcaster SRG, showed 47 percent opposed the initiative, which has been led by the right-wing Swiss People's Party, while 15 percent were undecided or gave no answer.

This Reuters article, co-filed from Zurich and London, put in an appearance on their website at 11:29 a.m. EST on Wednesday---and I found this story over at the gata.org Internet site.

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Gold Rises After Unusual Russian Central Bank Gold Buying Announcement

Russia’s central bank bought about 150 metric tons of the metal this year, announced Governor Elvira Nabiullina yesterday. The pronouncement immediately created buying in the market, prompting gold to rise to a two week high at $1,200 an ounce.

Russia's central bank Governor Elvira Nabiullina told the lower house of parliament about the significant Russian gold purchases. She is an economist, head of the Central Bank of Russia and was Vladimir Putin's economic adviser between May 2012 to June 2013. 

This announcement is unusual and to our knowledge has not happened before. The announcement by the Russian central bank governor was likely coordinated with Putin and the Kremlin and designed to signal how Russia views their gold reserves as a potential geopolitical and indeed financial and currency war weapon.  

Gold currently constitutes for around 10% of the bank's gold and forex reserves, she added.

"Unusual" is an understatement.  A better word would be "astonishing"---and in case it might have been lost on you, dear reader, I'd bet that this announcement was a veiled threat that, as I've said many time in the past, all Putin has to do is say the word---and the precious metal price management scheme would blow up in a New York minute---and take a large chunk of the Western banking/financial system with it---including Canada's beloved Scotiabank.  This must read commentary by Mark O'Byrne appeared on the goldcore.com Internet site yesterday---and the first person through the door with it was South African reader B.V.

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As The “Sanctions War” Heats Up, Will Putin Play His ‘Gold Card’?

One intriguing possibility is one which Russia has, in fact, contemplated before: Backing the currency with Russia’s gold reserves.[6] In the late 1980s, as the Soviet Union was breaking up, the rouble was in free-fall and inflation was soaring. Russia had essentially zero access to global capital markets and relied on oil exports for hard currency with which to trade with other nations. In 1989, Premier Gorbachev invited two prominent US economists to Russia, where they met with senior economic policy officials and recommended precisely this as the best way to stabilise the rouble. One of the two was former Fed governor Wayne Angell; the other, Jude Wanniski of ‘supply-side’ economic fame. In 1998, Mr Wanniski wrote that he “became alarmed about the financial collapse in Russia,” and decided to “write a piece on how to fix Russia right away, before it was in complete chaos.” In the Wall Street Journal editorial that followed, Mr Wanniski explained the longer history of the gold-backed rouble idea:

In September 1989, the Soviet government of Mikhail Gorbachev invited me to Moscow for nine days to discuss my unorthodox views on how the U.S.S.R. could make the conversion to a market economy. I’d been arguing that the process had to begin by fixing the ruble price of gold at a credible rate of exchange, which I believed then would be a relatively easy thing to do. I still believe that.

This long essay by John Butler appeared on David Stockman's website yesterday---and certainly falls into the absolute must read category.  The first person through the door with this commentary was Dan Lazicki.

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Nov 19, 2014

U.S. Pension Insurer Ran Record $62B Deficit in 2014

The deficit run up by the federal agency that insures pensions for about 41 million Americans has nearly doubled, to $62 billion. And the agency says that without changes, its program for pension plans covering 10 million of those workers will be insolvent within 10 to 15 years.

It was the widest deficit in the 40-year history of the Pension Benefit Guaranty Corp., which has now run shortfalls for 12 straight years. The gap grew wider in recent years because the weak economy triggered more corporate bankruptcies and failed pension plans. If the trend continues, the agency could need an infusion of taxpayer funds to pay retirees, who are guaranteed their pensions by law.

The PBGC said Monday that the increased deficit was due to worsening finances of some multi-employer pension plans, which are pension agreements between labor unions and a group of companies, usually in the same industry. The $62 billion deficit reported for the year ended Sept. 30 compared with $36 billion in the previous fiscal year.

This AP story showed up on the abcnews.go.com Internet site at 7:19 p.m. EST on Monday---and by the time that West Virginia reader Elliot Simon sent it my way, my Tuesday column was all full up, so here it is now.

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Flash Boys Raise Volatility in Wild New Treasury Market

In a flash, the bond market went wild.

What began on Oct. 15 as another day in the U.S. Treasury market suddenly turned into the biggest yield fluctuations in a quarter century, leaving investors worrying there will be turbulence ahead.

The episode exposed a collision of forces -- the rise of high-frequency trading and the decline of Wall Street dealers -- that are reshaping the world’s biggest and most important bond market. Money managers say the $12.4 trillion Treasury market is becoming less liquid, meaning securities can no longer be traded as quickly and easily as they used to be, thanks in part to the Federal Reserve’s bond-buying program.

“The way the market is set up right now, we’ll see instances like we did on that day,” said Michael Lorizio, senior trader at Boston-based Manulife Asset Management US LLC, which oversees $281 billion. “There’s going to be a learning curve as to how to handle that.”

This longish Bloomberg article put in an appearance on their Internet site at 5:45 p.m. Denver time Tuesday afternoon---and it's the second contribution in a row from Elliot Simon.

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Buffalo is About to Get Slammed With 6 Feet of Snow and the Photos are Already Wild

Starting early Tuesday morning, 3 feet of snow blanketed parts of western New York, especially the city of Buffalo — and the deluge likely won't stop for days. 

The National Weather Service has issued a lake effect snow warning for Genesee, Erie, and Wyoming counties until 1 p.m. ET on Wednesday. Snowfall rates could hit 5 inches per hour, bringing a potential total of 6 feet of snow, the service reports.

Lake effect snow occurs when a cold front moves over a large body of warmer water, creating unstable temperatures in the atmosphere. As a result, clouds form, suck up water, and develop into heavy snow as they move downwind. 

Whiteout conditions forced the closure of I-90, a major highway in the area, in both directions. Going forward, visibility could reach zero at times, according to the National Weather Service.

This incredible photo-essay appeared on the businessinsider.com Internet site yesterday at 10:39 a.m. EST---and the pictures are definitely worth the trip.  I thank Roy Stephens for his first offering of the day.

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Jim Rickards: Four Bloomberg Interviews

1. Does the G-20 Communique Offer Enough Specifics? [2:32 minutes]  2. Why M&A Activity Has Picked Up This Month  [7:04 minutes]  3. Japan Has Been in a Depression Since 1990 [6:47 minutes]  4. Oil Prices Plunge: How Likely Is Action From OPEC? [3:57 minutes]

I must admit that I haven't had time to watch all of them---and I thank reader Harold Jacobsen for providing all these Bloomberg video clips.

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International Man: What If Silicon Valley Moved to Puerto Rico?

The tax benefits of Puerto Rican residency gained some attention and notoriety when hedge fund billionaire John Paulson went to Puerto Rico to “kick the tires.”

He did not become a Puerto Rican resident (not yet, at least), but ended up buying a resort there instead. My theory is that John Paulson can’t move anywhere without attracting adverse media attention. The media would declare that Paulson’s purchase of a Big Gulp at Seven Eleven as tax motivated.

Puerto Rico has long used corporate tax incentives to attract many large American multinational companies. Both Apple and Microsoft can attribute a great deal of their tax benefits and success to Puerto Rico. Many pharmaceutical companies have Puerto Rican operations.

The Puerto Rican government—not lacking in creativity—passed a series of tax bills in 2012 to create economic incentives for Americans to move and start businesses in Puerto Rico. Namely, they eliminated taxation on dividends, interest, and capital gains as well as reduced corporate taxes to just 4%.

This very interesting commentary appeared on the internationalman.com Internet site the other day.

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ECB entering 'very dangerous territory' warns S&P

The European Central Bank’s plans for €1 trillion of monetary stimulus is fraught with risk and is likely to fail without full-blown bond purchases, Standard & Poor’s has warned.

The agency said the ECB’s blitz of ultra-cheap loans to banks (TLTROs) cannot generate more than €40bn of net stimulus once old loans are repaid, given regulatory curbs imposed on lenders.

Jean-Michel Six, the agency’s chief European economist, said ‘doves’ on the ECB’s governing council know that the loan plan is unworkable but are going through the motions in order to persuade German-led ‘hawks’ that all conventional measures have been exhausted, even if this means a debilitating delay.

“Risks of a triple-dip recession have increased,” said Mr Six. "The ECB has one last arrow and that is quantitative easing of €1 trillion, needed to restore the M3 money supply to trend growth."

This Ambrose Evans-Pritchard commentary showed up on the telegraph.co.uk Internet site at 5:55 p.m. GTM on Tuesday afternoon---and it's courtesy of South African reader B.V.

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France will not sign multi-billion transatlantic trade deal with U.S. in 2015

The French government will not support the Transatlantic Trade and Investment Partnership (TTIP) between the E.U. and U.S. as long as a controversial stipulation is included.

France, like the U.K. and Germany, will block the trade deal altogether if the mechanism of investor-to-state dispute settlement (ISDS) is included; EurActiv France reported.

The clause appears in most free trade agreements, and would leave France defenseless against foreign companies taking legal action against it if laws and legislation stunt profits.

"France did not want the ISDS to be included in the negotiation mandate," France's Secretary of State for Foreign Trade, Matthias Fekl told the French Senate. "We have to preserve the right of the state to set and apply its own standards, to maintain the impartiality of the justice system and to allow the people of France, and the world, to assert their values," he added.

This story showed up on the Russia Today website at 1:00 p.m. Moscow time on their Tuesday afternoon---and it's courtesy of Roy Stephens.

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Merkel Issues Rebuke to Russia, Setting Caution Aside

Tit-for-tat expulsions of diplomats. Russian naval ships showing up as world leaders meet in Australia. Chancellor Angela Merkel of Germany telling Russia sternly to play by 21st-century rules — and President Vladimir V. Putin practically spitting fury over Western reaction to his annexation of Crimea.

As relations between Russia and the West increasingly resemble the bygone days of the Cold War, Ms. Merkel abandoned her traditionally cautious tone on Monday, castigating Russia for its actions in Ukraine, for intimidating sovereign states in Eastern Europe and for threatening to spread conflict more broadly across Europe.

“The Ukraine crisis is most likely not just a regional problem,” Ms. Merkel said in a speech at the Lowy Institute for International Policy in Sydney, Australia. “In this case, we see it affects us all.”

This propaganda piece showed up on The New York Times website on Monday sometime---and I'd be very careful about reading too much into it, as this paper, along with the WSJ and Washington Post are mouthpieces for the U.S. government.  I thank Phil Barlett for being the first reader through the door with this story yesterday.

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Mistaken identity: French plane entered Swedish air space – not Russian as reported

The Swedish military has confirmed a “Russian” aircraft that entered Swedish airspace on Saturday was actually French. The Expressen newspaper had falsely reported a Russian plane was "a couple of kilometers on the wrong side of the border.”

The military plane actually turned out to be from France and Jesper Tengroth, a press officer for the Swedish military said they are now going to investigate what the plane was actually doing there. Speaking to The Local news website, he was unable to give any further details about the French aircraft and added The Expressen publication would, “have to take responsibility for their sources.”

The French Embassy in Stockholm says they are currently investigating the air violation. “I do not have any information right now. We are in contact with Paris to understand what is happening,” said Lionel Fabre, who is the embassy’s press officer, as reported by Expressen.

However, Janzen made no mention of the mix-up on his Twitter page, preferring to continue condemning Moscow for testing Europe’s air defenses.

Stories such as this will never be allowed to appear in the Western press.  This one appeared on the Russia Today website at 6:30 p.m. Moscow time on their Monday evening, which was 10:30 a.m. EST.  It's courtesy of reader M.A.

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Ukraine Shows Signs of Accepting Novorussia As an Independent Neighbor

This is an interesting article that forcefully conveys the fact that Kyiv [Kiev] continues to raise the alarm about existing or potential Russian or Novorossiyan bellicosity and to proclaim its readiness to fight a renewed full-scale war.

However, with Ukraine disowning retirees in Donbass and contemplating trade deals with the rebel leadership there are increasing signs that this combative attitude is really for internal consumption, and that Kyiv is actually beginning to gradually adjust to the reality of Novorossiya outside its sovereignty.

This interesting 3-page article was posted on the russia-insider.com Internet site early Tuesday morning sometime---and I thank Roy Stephens for sending it.

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Pepe Escobar Explains Ukrainian Economics in 1 Minute

Kiev’s foreign reserves plunged last month by a whopping 23.2 per cent to a paltry $12.6 billion.  

By the end of the year it will be even messier.

Kiev’s gotta pay a $3.1 billion gas bill to Gazprom, or else…  

The central bank will have to sell more foreign currency to support the hryvnia. And there are MORE hefty gas bills as General Winter advances.

This tiny absolute must read commentary by Pepe showed up on the russia-insider.com Internet site on Monday sometime---and it's courtesy of reader B.V.

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Putin says United States will never 'subdue' Russia

The United States wants to subdue Moscow, but will never succeed, Russian President Vladimir Putin said on Tuesday.

"They do not want to humiliate us, they want to subdue us, solve their problems at our expense," Putin said at the end of a four-hour meeting with his core support group, the People's Front.

"No one in history ever managed to achieve this with Russia, and no one ever will," he said, triggering a wave of applause.

Putin's tough talk reflected the strain in ties between Moscow and Washington, who are at loggerheads over the crisis in Ukraine, where the West has accused Russia of promoting and arming a separatist rebellion.

This Reuters news item, filed from Moscow, showed up on their website at 12:07 p.m. EST on Tuesday---and it's courtesy of Roy Stephens.  Roy also sent along the Russia Today version of the same news item headlined "Putin: ‘U.S. wants to subdue Russia, but no one did or ever will’"---and I urge you to read them both for comparison purposes---and then decide which one is the most believable.

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Poland: E.U. and NATO pressure France into giving up on Mistral delivery to Russia

The European Union and NATO members are trying to persuade France to stop the delivery of Mistral helicopter carriers to Russia, Poland's Deputy Prime Minister and the head of Defense Department Tomasz Siemoniak said Tuesday. He was at the scheduled meeting of the EU defense ministers.

He said the issue was discussed on the sidelines of the talks in Brussels. “The pressure on France is strong. I am confident that France will make a wise and responsible decision, knowing that it is a NATO member.”

He added that Poland is against France's selling high-technology military equipment to Russia.

In his opinion, France is already close to a decision on Mistral delivery to Russia.

This news story showed up on the itar-tass.com Internet site at 8:16 p.m. Europe time yesterday evening---and I thank Roy Stephens for sharing it.

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Russian ruble recovering against U.S. dollar as oil heads back to $80

The Russian currency started to bounce back in Tuesday trading, as oil prices edged closer to $80 per barrel, an important benchmark that was crossed last week.

The US dollar lost 28 kopecks to 46.82 rubles at 10:55 Moscow time (07:55 GMT) going below 47 rubles for the first time since last week. The Central Bank of Russia also cut its official rate for the American currency for Wednesday, dropping it by 35.32 kopecks to 46.98.

The price of oil is also recovering, with Brent December futures climbing above $79 per barrel heading to an $80 per barrel threshold.

"After the expiration of December contracts, a traditional rebound has started. High chances remain for a full-fledged [upward] correction. The next growth target is in the range of $85.5-86.5 per barrel for Brent crude," he said.

This news item was posted on the Russia Today website at 11:28 a.m. Moscow time on their Tuesday morning---and once again I thank Roy Stephens for finding it for us.

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Russia's Rosneft Invites China to Participate in Joint Arctic Projects

Russia’s oil giant Rosneft has invited Chinese companies to participate in joint energy projects in the Arctic, Russian Resource Minister Sergei Donskoi said Tuesday.

“The Chinese have received an offer and are looking at participation in these projects [in the Arctic]. We’re talking about with Rosneft,” the minister said.

Russian and Chinese relations have been actively developed over the past few months.

Earlier in November, Russian President Vladimir Putin stated that increasing cooperation with China, including in the energy sector, is one of Russia's top foreign policy priorities.

This short news item put in an appearance on the sputnik.com Internet site at 4:50 p.m. Moscow time on their Tuesday afternoon---and I thank reader M.A. for bringing it to our attention.

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Japan Goes Full Helicopter-Ben: Prints "Free Gift-Cards" to Spark Consumption

Since Ben Bernanke reminded the world of the existence of government printing-presses, echoed Milton Friedman's "helicopter drop" solution to fighting deflation, and decried Japan for not being as insane as it could be... it has only been a matter of time before some global central bank decided that the dropping of cash onto the populace was the key to economic recovery.

Having blown their wad on QQE (and been left with a triple-dip recession), it appears Japan has reached that limit.

As Japan's News47 reports, Prime Minister Shinzo Abe has instructed his cabinet to develop economic measures such as handing out 'gift certificates' to the poor to "support personal consumption directly."

This Zero Hedge article showed up on their website at 8:55 p.m. EST on Monday evening---and I found it embedded in yesterday's edition of the King Report.

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Japan's 'Abenomics' can survive quadruple-dip recession

Abenomics is alive and well. Japan’s crash into its fourth recession since 2008 is a nasty surprise for premier Shinzo Abe but it tells us almost nothing about the central thrust of his reflation blitz.

The mini-slump is chiefly due to a one-off fiscal shock in April. Mr Abe defied warnings from Keynesian critics and unwisely stuck to plans drawn up by a previous (DPJ) government to raise the consumption tax from 5pc to 8pc.

The essence of Abenomics is monetary reflation a l’outrance to lift the country out of deflation after two Lost Decades. The unstated purpose of this “First Arrow” is to lower real interest rates and raise the growth of nominal GDP to 5pc, deemed the minimum necessary to stop Japan’s debt trajectory from spiralling out of control.

This is a formidable task and may ultimately fail. Public debt is already 245pc of GDP. Debt payments are 43pc of fiscal revenues. The population is expected to fall to from 127m to 87m by 2060. Given the grim mathematics of this, the inertia of the pre-Abe era was inexcusable.

Ambrose Evans-Pritchard, who never met a monetary inflation he didn't like, tries to put lipstick on the Abenomics pig for his New World Order masters---and I'll leave it up to you, dear reader, to determine whether he succeeds or not.  I gave it a big thumbs down.  This article was posted on The Telegraph's website at 8:27 p.m. Monday evening GMT---and I thank Roy Stephens for finding it for us.

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David Stockman: Why Japan’s Money Printing Madness Matters

This is getting hard to believe. The announcement that Japan has plunged into a triple dip recession should have been lights out for Abenomics. But, no, its madman prime minister has now called a snap election to enlist more public support for his campaign to destroy what remains of Japan’s economy.

And what’s worse, he’s not likely to be stopped by the electorate or even the leadership of Japan Inc, which presumably should know better. Here’s what Japan leading brokerage had to say about the “unexpected” 1.6% drop in Q3 GDP—- compared to the consensus expectation of a 2.2% gain and after the upward revised shrinkage of 7.3% in Q2.

"We think that the economy is gradually improving,” said Tomo Kinoshita, an economist at Nomura Securities. “There’s no reason to be pessimistic about the economy going forward.

Really? How in the world can an economist perched at the epicenter of Japan Inc. think that its economy is improving when Japan’s constant dollar GDP has now fallen back to pre-Abenomics levels; and, in fact, is no higher than it was in late 2007 prior to the “financial crisis”? Indeed, aside from the Q1 pull-forward of spending to beat the consumption tax increase, Japan’s economy has remained stranded on the flat-line it attained after world trade recovered from its 2008-2009 plunge.

David rips Prime Minister Abe a new one in this very long chart-studded commentary that was posted on his website yesterday.  It's definitely worth reading, but only to the point where your eyes start to glaze over.  It's the last offering of the day from Roy Stephens, for which I thank him.

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Mercedes Vision G-Code concept is one big solar panel

Mercedes-Benz is in the midst of overhauling its SUV and crossover lineup in both makeup and name, with a new GLC model slated to replace the GLK, a GLE to replace the GL and even a new G-Class to cap it all off. But it's not just the production utilities which Benz has been working on.

Presented at the opening of the German automaker's new R&D center in Beijing, this new Vision G-Code concept takes the form of a Sports Utility Coupe that – at 161 inches long – is even shorter than the GLA that's currently Mercedes' smallest crossover. But despite its compact form, the G-Code is packed with cutting-edge technology.

For one, it uses multi-voltaic silver paint that transforms the body into one continuous solar panel. It fuels the electric portion of the otherwise unspecified hybrid power train that offers through-the-road all-wheel drive and the option of pure electric mobility. There's even a holographic grille at the front that indicates what mode the vehicle is in, similar to what we saw recently on Mercedes' Future Truck 2025 concept. The grille is flanked by LED headlights, with another strip of LEDs around back and tiny cameras that pop out of the hidden a-pillars to act as rear view mirrors (this is a concept, after all).

This interesting article put in an appearance on the autoblog.com Internet site back on November 3---and I thank Toronto reader 'Michael G' for digging it up for us.

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Council to lobby central banks to adopt platinum

South Africa's platinum producers Anglo American Platinum, Lonmin and Impala Platinum have formed a council that will seek to boost investment demand for the metal including lobbying governments to have it installed as a reserve asset.

Paul Wilson, the newly appointed CEO of the World Platinum Investment Council said the organisation also hoped to capitalise on the growth of platinum demand in China by having jewellery owners - who consume net 1.6 million ounces of the metal or 70% of the metal's jewellery market - consider platinum as an investment asset.

"There is a long term desire at the council to have platinum listed as a reserve currency," said Wilson in a telephonic interview today. "I can’t see why they [the South African Reserve Bank] can’t hold it in the same way as it holds gold," he said.

As Chris Powell said in his preamble to a similar story in the Financial Times yesterday---"Maybe gold miners will figure it out for their own metal eventually as well."  Of course the platinum and palladium producers are in the same boat as the silver, gold and copper miners---held hostage by the paper games of JPMorgan et al in the COMEX futures market.  This article appeared on the miningmx.com Internet site at 5:00 p.m. SAST yesterday afternoon---and it's worth reading.

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Ukraine Admits Its Gold is Gone: "There is Almost No Gold Left in the Central Bank Vault"

Back in March, at a time when the IMF reported that Ukraine's official gold holdings as of the end of February, so just as the State Department-facilitated coup against former president Victor Yanukovich was concluding, amounted to 42.3 tonnes or 8% of reserves.

Notably, under the previous "hated" president, Ukraine gold's reserves had constantly increased hitting a record high just before the presidential coup we reported of a strange incident that took place just after the Ukraine presidential coup, namely that according to at least one source, "in a mysterious operation under the cover of night, Ukraine's gold reserves were promptly loaded onto an unmarked plane, which subsequently took the gold to the U.S."

Needless to say there was no official confirmation of any of this taking place, and in fact our report, in which we mused if the "price of Ukraine's liberation" was the handover of its gold to the Fed at a time when Germany was actively seeking to repatriate its own physical gold located at the bedrock of the NY Fed, led to the usual mainstream media mockery.

Until now.

This interesting---but not entirely surprising news item appeared on the Zero Hedge website at 7:47 p.m. EST yesterday evening---and I thank South African reader B.V. for his last contribution to today's column.

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Jim Rickards: Measuring the Islamic State's Ability to Mint Money

West Shore Group's Jim Rickards discusses the finances of the Islamic State militant group with Bloomberg's Matt Miller on "Street Smart."

This 4:54 minute video clip showed up on the Bloomberg website on Monday sometime and, as usual, I thank reader Harold Jacobsen for bringing it to my attention---and now to yours.  It's worth watching.

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Lawrence Williams: Gold bounces back above $1,200 – will it jump higher?

Gold bounced back above $1,200 this morning in London, but before one can be sure that this is the start of the long-expected recovery there could yet be teeth in the bear. The big money playing the futures markets with paper gold can still exert ultimate control over where the price is headed short term and if it suits them there could yet be another sharp price drop to try and drive out any remaining weak gold holders.

But medium term it may be that options are becoming more and more limited for keeping the market depressed. Gold continues to flow from West to East with the big recovery in Indian demand coupled with continuing high levels of withdrawals from the Shanghai Gold Exchange as the key elements in this. Although whether Indian demand has recovered to overtake China’s over the past two quarters as World Gold Council figures might suggest, and which has been reported as fact by much of the media, given SGE withdrawal figures have been running at such high levels of late we think is not a true picture of the real situation, but in combination India and China are taking in gold at back to peak levels.

Demand is also seen as high in a number of other countries in Europe, the Middle East and elsewhere in Asia, while Russia and some of the old FSU countries are adding to their gold reserves thus taking even more metal off the markets. It is hard to see where all this volume of gold is coming from as it certainly substantially exceeds new global gold output.

This commentary by Lawrie was posted on the mineweb.com Internet site on Tuesday sometime---and it's certainly worth reading.

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